The Central bank of Nigeria (CBN) has said that its newly introduced ‘Naira-for-dollar’ policy will reduce cost and check round-tripping.
It would be recalled that the CBN had, in a circular at the weekend announced the introduction of an incentive of N5 for every $1 of fund remitted to Nigeria through International Money Transfer Organisations in the bank’s new forex policy.
The bank explained that all recipients of diaspora remittances through CBN’s licensed IMTOs “shall henceforth be paid N5 for every $1 received as remittance inflow.”
It said the move was part of its reforms to boost the inflow of foreign currency into the country.
It also stated that the N5 for every $1 fund remitted to Nigeria initiative would begin on Monday (today).
“The CBN shall through commercial banks, pay to remittance recipients the incentive of N5 for every $1 remitted by a sender and collected by the designated beneficiary.
“This incentive is to be paid to recipients whether they choose to collect the United States dollar as cash across the counter in a bank or transfer same into their domiciliary account. In effect, a typical recipient of diaspora remittances will at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received,” it stated.
Explaining the new policy further, the bank’s acting director, corporate communications department, Mr. Osita Nwanisobi, in a statement entitled ‘New policy on remittance inflow to reduce cost, check round-tripping’ said there is was a maximum amount that could be remitted through an IMTO, adding that no customer could send $100,000 through an IMTO.
Though he admitted that the CBN action did not go far enough in offering total reimbursements, Nwanisobi said it was a step in the right direction in reducing the cost burden for Nigerians remitting funds to Nigeria.
While also noting the existence of initial challenges of network integration, Nwanisobi gave the assurance that the CBN would continue to work assiduously to resolve the few challenges that were remaining.
Meanwhile, the director general of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, commended the CBN for the new policy saying it is a laudable move to encourage foreign exchange inflows into the economy and ease the current liquidity challenges in the country’s foreign exchange market.
“This would surely have a positive impact on inflows and ultimately on the exchange rate. But the CBN should go a step further by allowing exporters unfettered access to their export proceeds, whether in foreign exchange or naira.
“The current practice of imposing the NAFEX rate on export proceeds should be discontinued in the spirit of the current move to provide an incentive for foreign exchange inflows.
“Similarly, FDIs and FPIs should be allowed greater flexibility in conversion rates of their inflows. A combination of these supply-side strategies would have a remarkable impact on foreign reserves, forex liquidity, and the naira exchange rate,” he said.
Also, an Associate Professor of Economics at the Lagos Business School, Dr. Bongo Adi said: This is a good and welcomed initiative although we might have to contend with the fact that it is sort of a devaluation of the currency.
“If you look at the macroeconomics of it, a lot of Nigerians in the diaspora have attachments back home and that has been why remittances have been a major source of Nigeria’s foreign exchange supply. If I were sending $1 and I can get more naira, I would be encouraged to send in more money and keep here.”
